Department of Economics & Finance
College of Business - City University of Hong Kong AACSB International EQUIS - European Quality Improvement System

The CityU-UN LINK Forecasting Model of
the Hong Kong Economy (CityU-UN LINK Model)


The CityU-UN Forecasting Model of the Hong Kong Economy (“CityU-UN HK Model”), one of the 79 member models of the United Nations Project LINK, is developed and maintained by a forecast team led by Professor Win Lin Chou of the Department of Economics and Finance in the College of Business of the City University of Hong Kong. The project, formerly known as “LINK HK Model”, is now supported by the Research Center of International Economics (RCIE) of CityU.

The main objective of the CityU-UN HK Model is to produce short- and medium-term forecasts on Hong Kong's GDP and its major components. These forecasts are submitted to Project LINK for the compilation of the UN publication, World Economic Outlook.

The LINK HK Model, originally started and maintained by Professor Chou at the Chinese University of Hong Kong, had also been used to serve other research needs. For instance, in a Competitive Earmarked Research Project funded by the Research Grants Council (RGC), the LINK HK Model was linked to an econometric model of China to investigate the potential impact of China's accession to the WTO on Hong Kong. Simulation results indicated that China's WTO accession could help boost Hong Kong's economic growth.

The LINK HK Model had also been engaged in the following consultancy projects:

  • a study of the Hong Kong monetary sector (commissioned by the HKMA),
  • an Employment Projection Model for Land Use Planning (commissioned by the Planning Department of the SAR government),
  • a study on Economic Contributions of Hong Kong's External Trade Sector (commissioned by Hong Kong Trade Development Council),
  • a study on the Income-based Contributory Scheme (commissioned by the Health, Welfare and Food Bureau of the SAR government), and
  • a Long-term Forecast Project on Economic Growth and Electricity Consumption (commissioned by CLP Power).

In response to the growing availability on GDP data, the LINK HK Model is revised every year. The 2010 version consists of 89 equations with more than 100 predetermined variables. It is probably the most comprehensive econometric model in Hong Kong and it has the following special features:

  • it is capable of making short-, medium-, and long-term forecasts;
  • it is the only model in Hong Kong that is capable to do “policy simulations”; and
  • it is the only model in Hong Kong that produces “annual” forecasts on Hong Kong's GDP and its major components twice a year.

Table 1 summarizes the forecasts prepared by the LINK HK Model for the LINK Spring and Fall meetings on real gross domestic product (GDP) growth from 2001 to 2010, along with the corresponding forecasts released by the Hong Kong SAR government (in the March Budget) and the APEC Studies Program of the University of Hong Kong (in September or October), respectively. A comparison of these forecasts shows that the forecasts of the LINK HK Model outperform those prepared by the SAR government and the University of Hong Kong.

Table 1: A Comparison of Three Major Forecasts on Real GDP Growth Rates (%) in Hong Kong, 2001-2010

Year Annual forecast made in Spring Annual forecast made in Fall Actual GDP Growth Rate4
CityU-UN LINK Model (Spring)1 HK SAR Govt (Mar.)2 CityU-UN LINK Model (Fall)1 HKU
2001   5.5 0.37 0.1 0.1
2002 1.64 1.0 0.53 1.4 2.3
2003 2.01 3.0 2.45 2.2 3.3
2004 5.76 6.0 7.16 7.0 8.1
2005 5.98 4.5 – 5.5 5.64 6.4 7.3
2006 5.84 4.0 6.20 5.7 6.8
2007 5.20 4.5 – 5.5 6.41 6.0 6.3
2008 5.20 4.0 – 5.0 4.57 4.2 2.5
2009 -1.71 2.0 – 3.0 -2.49 -3.1 -2.7
2010 5.47 4.0 – 5.0 6.48 6.2 6.85


represents a more accurate and precise forecast when compared to the actual GDP growth rate
  1. Sources: LINK HK Model, various versions.
  2. Sources: Budget Speech (, various years.
  3. Sources: The APEC Studies Program of University of Hong Kong, various years (
  4. Preliminary figures. Sources: HK Census and Statistics Department, Gross Domestic Product (Quarterly), various issues.
  5. Source: HK Census and Statistics Department, Gross Domestic Product (Quarterly), February 2011 issue.

Project LINK, founded under the leadership of Nobel Laureate in Economic Sciences Lawrence Klein of the University of Pennsylvania in 1968, is an ongoing large-scale international research project, which links up independently developed national and regional econometric models into a global model.

Included in the Project LINK are 33 OECD member countries, more than 40 developing countries and regions, and most economies in transition. The most important feature of Project LINK is its reliance on the expertise in modeling and economic analysis of resident economists from its members. At present, Project LINK is coordinated jointly by the United Nations and University of Toronto.

Project LINK organizes two meetings a year (usually in Spring and Fall) at which participants discuss LINK forecasts, and emerging world economic issues. The meetings also include technical sessions on econometric methodologies applicable to national or international modeling.

For more information on Project LINK, please visit the following websites: